"The lodging industry is one of the few segments of the economy
with pricing power, which should result in record profits in 1997 and 1998,"
Mueller said. Mueller made his comments at the Montgomery Securities 27th
Annual Investment Conference, the largest annual investment conference
devoted exclusively to growth stocks, which is running now through September
26. More than 1,000 institutional investors are attending the conference,
which features 235 growth companies and 25 analyst-led workshops. Among
the lodging and timeshare companies making presentations at the conference
are: Hilton Hotels, Host Marriott, Patriot American Hospitality, Signature
Resorts, Starwood Lodging and Vistana.

Mueller detailed for investors the favorable conditions currently affecting
the lodging and timeshare industries. After a period of overbuilding in
the 1980s, the balance between supply and demand in the 1990s has swung
in favor of hoteliers, with an undersupply of rooms existing particularly
in the urban, upscale full-service and extended-stay segments. As a result,
room rate growth has exceeded inflation since 1994.

Mueller highlighted the following five areas within the lodging sector
that are particularly attractive:

Urban, Upscale, Full-Service Hotels

Mueller noted that the urban/upscale hotel segment is attractive as
there is strong demand and limited supply growth, translating into significant
pricing flexibility. Demand is up as a result of the healthy economy and
increased business and leisure travel. Some of Mueller's recommendations
in this area include: Doubletree/Promus, FelCor Suite Hotels, Host Marriott,
Hilton Hotels, Marriott International, Patriot American and Starwood Lodging.

Extended-Stay Segment

Mueller said that extended-stay hotels are another attractive area for
investors: "These are basically hotel rooms with kitchens, and demand
is far greater than supply." Mueller's stock selections in this segment
include: Candlewood, Prime Hospitality and Innkeepers USA Trust.

Extensive Remodeling/Repositioning

The third interesting area in this industry, Mueller said, is the remodeling
and repositioning of "older, well-located hotels to 'like-new' condition."
Hotel operators can buy these hotels at attractive prices that are less
than the cost of building a new hotel from scratch, and the hotels then
generate high returns after the repositioning is completed. Mueller's stock
choice in this segment is La Quinta, which just finished remodeling its
entire chain this spring. Other recommendations include: American General,
Bristol Hotel and Servico.

Lodging REITs

Lodging REITs, Mueller said, "are a great way to participate in
the hotel industry's recovery." They have been growing rapidly: at
the beginning of the 1990s, there were two lodging REITs with a combined
market value of $100 million; today, there are 14 lodging REITs with a
combined market value of $13 billion. Successful lodging REITs are characterized
by: experienced management; a well-maintained, high-quality asset base;
hotel holdings with strong proprietary positions in their markets; a proven
track record; a financially sound acquisition and development strategy;
and a strong balance sheet. Among Mueller's stock selections in this area
are: FelCor Suite Hotels, Starwood Lodging, Patriot American, Innkeepers
USA Trust and RFS Hotel Investors.

Timeshare

"We're very excited about the timeshare business for several reasons,"
Mueller said. "It's growing very fast--both in terms of total sales
and number of timeshare owners--and it has strong consumer appeal."
Mueller said consumers perceive timeshares as a good value, and the exchange
privileges that come along with the unit are seen as flexible and convenient.
For timeshare operators, the industry offers excellent unit economics and
the opportunity to earn additional profits by financing consumer purchases
of the units. Mueller said the timeshare business remains fragmented, with
the industry leaders (Signature Resorts and Marriott) each holding only
5 percent of the market. Mueller's recommended stocks in this area are
Signature Resorts, Trendwest and Vistana, with Signature being the most
rapidly growing company in the group.

Montgomery Securities is one of the nation's premier investment banking
and institutional brokerage firms. Dedicated to growth companies, Montgomery
combines focus and specialization in research and investment banking with
bulge-bracket capabilities in global distribution and large-block trading.
Montgomery has offices in San Francisco, New York and Boston. Montgomery
has agreed to be acquired by NationsBank Corporation and will be merged
with NationsBanc Capital Markets, Inc. to form NationsBanc Montgomery Securities
Inc.